Americans Lack Bond To Savings, Study Finds

May 06, 1997|By Holly Bailey, Washington Bureau.

WASHINGTON — Sixty-five million American households will not be able to afford major life goals, such as paying for college, because they lack a comprehensive financial plan, according to a study issued Monday.

The survey released by the Consumer Federation of America and NationsBank found that while most Americans are setting aside some money, they are saving too little.

"Americans are starting to get serious about their retirement years, but they are off track in saving for other life goals," said Steven Brobeck, director of the federation.

Approximately 66 percent of all households put money into either an emergency or retirement fund.

But according to the study, only about a third are saving to purchase a home or to pay for future college expenses.

About half of those surveyed say they are saving to make a major purchase, such as a car, and 17 percent say they have been setting aside funds to care for an elderly parent.

"They are ignoring important goals," said Diane Colasanto of the Princeton Survey Research Associates, who administered the study.

The survey of 1,770 households found that 84 percent currently have some sort of savings, but many find it hard to follow through on a plan.

"Even after people had started to save for a goal, many savers' habits were haphazard," Colasanto said. She said consumers either fail to define financial goals, don't invest enough or don't take their savings plans seriously.

The survey found that a saver's progress is determined more by having a comprehensive plan than by having a good grasp of investment concepts.

Households that report having a financial plan or goal are saving twice as much as those without plans, Colasanto said. Those same planners report they are saving for all goals rather than just retirement. "Those with a plan are saving more money, regardless of their income," she said.

Households with financial plans in place also reported they have a better grasp of where their money is being spent each month. They distribute their funds better, Roper said.

CFA and NationsBank are launching a nationwide campaign to educate consumers on financial planning.

Plans include posting financial planning advice on the Internet and holding seminars in cities across the U.S.

The effort will be aimed in particular toward minorities and low-income households.

"This research makes it clear that you don't have to be a financial expert to be financially successful," said Ken Lewis, NationsBank president.